Problem
The treasurer of a firm noted tha many invoices were received with the following terms of payment: "2%- days, net 30 days." Thus, if the bill is paid within 10 days of its date, he could deduct 2%. Or the full amount would be due 30 days from the invoice date. Assuming a 20-day compounding period, the 2% deduction for prompt payment is equivalent to what effective annual interest rate?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.